What is the firm after-tax WACC

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Afirm has $50 billion (B) of capital, including $108 of debt and $408 of equity. The debt capital consists of $2B in loans at an interest rate of 8% compounded quarterly and Sas in$1,000 10-year 5% quarterly bonds having a brokerage fee of $12 per bond. The equity capital consists of $108 in retained earnings and S308 in common stock. The firm's beta is 1.25. The risk-free interest rate is 3%. The firm bases its WACC calculation on a US equity market risk premium of 5%. Its income tax rate is 40%. What is the firm's after-tax WACC? Show your answer as a percentage to 2 decimal places.

Reference no: EM131848057

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